Greater Philadelphia Chamber of Commerce Refines Its Challenge to Philadelphia’s Salary-History Ban in Chamber of Commerce for Greater Philadelphia v. City of Philadelphia

June 16, 2017
In January 2017, the City of Philadelphia passed a law that makes it an unlawful employment practice for an employer to inquire about or to rely upon an applicant’s salary history in determining the compensation it will offer, which was intended to take effect on May 23, 2017.  Other cities and states have followed suit.  In New York City, for example, a similar salary-ban law will take effect on October 31, 2017.  And Massachusetts, New Orleans, and Pittsburgh have also enacted their own salary-history laws.  In addition, other jurisdictions, such as California, Washington State, and Washington, D.C., are considering similar legislation.

These laws, which are based on the theory that basing starting salary on prior salaries could exacerbate perceived gender-based compensation disparities, would upend long established employer practices.  Their terms, particularly the terms of the New York law, contain ambiguities that could present difficulties for employers in compliance.

On April 6, 2017, the Chamber of Commerce for Greater Philadelphia sued the City in federal court for a temporary and permanent injunction, alleging that the ban is unlawful because it violates businesses’ freedom of speech, is unconstitutionally vague, and violates the Commerce Clause.  The Chamber also asserted the ban will not achieve the City’s stated goal of closing any gender wage gap.  Chamber of Commerce for Greater Phila. v. City of Phila., No. 17-cv-01548 (E.D. Pa.), ECF No. 3–1 at 2.  The City agreed voluntarily to stay the law pending resolution of the Chamber’s suit.  On April 19, 2017, the court issued a stay order  pending a ruling on the Chamber’s request for a preliminary injunction.  Id., ECF No. 21.

On May 30, the court granted the City’s motion to dismiss the Chamber’s case on standing grounds because the Chamber did not “identify a member who will suffer specific harm as a result of the Ordinance.”  Id., ECF No. 27 at 9.  The court gave the Chamber leave to amend its complaint to address this deficiency.  Id. at 10.

Earlier this week, on June 13, the Chamber filed an amended complaint alleging that “the ordinance will harm the Chamber and its members.”  Id., ECF No. 29 at 14–15.  The Chamber attached 14 declarations from its members, which include large companies such as Comcast Corporation, describing how their Philadelphia business “will be irreparably harmed by the Ordinance.”  See, e.g., id., ECF No. 29–4 ¶ 7.  Philadelphia’s salary-history ban will remain stayed while the court considers any additional motions and the Chamber’s request for a preliminary injunction.

The outcome of the City of Philadelphia lawsuit may well affect the salary-history bans considered and enacted by cities and States around the country.